Positive on Jubilant Foodworks, target Rs 1650: Girish Pai

Girish Pai, Head of Research at Nirmal Bang Institutional Equities told CNBC-TV18, "We have scaled down both estimates and the price target in Jubilant Foodworks. It is a pretty disappointing from same store sales growth (SSSG) perspective. We were expecting 6-7 percent growth. The company delivered 3.2 percent but you should look at it from the context of what the others have done, in terms of the peers how they have performed. We have had Yum! brand which has delivered, over the last four quarters, something like 11-18 percent. It has declined in growth whereas we have had positive growth come through from this company for almost four quarters now. So it has been gaining in market share in that particular segment.""We remain positive on the company. Based on our current target price, we do see at least 18-20 percent upside from where this stock is right now. We think that the company has done the right thing over the last many years now. The store number has gone up from about 180 to more than 950 as things stand right now over the last seven-eight years. It has been investing through the downturn both in terms of stores, in terms of products and it added Dunkin Donuts which is delivering losses right now. When consumption sentiment turns around, we think that this company can definitely deliver SSSG of high single digit may be even low teen kind of a number," he said. "We think earnings can triple from where they are right now. Over the next three years, we think return ratios can double from where they are right now. So it is still a high quality consumption stock that one can play on. It is not cheap stock so to say but we think earnings growth can deliver the kind of stock returns that we are looking at.""We are looking at something like Rs 1,650 or thereabouts from where it is right now. If you take a slightly longer-term view on the stock, we think there is probably 60 percent upside. So my analyst on Jubilant thinks that the stock can potentially go up to about Rs 2,200. We are factoring in FY'18 numbers there," he added.